Carbon trading will increase cost of electricity

The Energy Users Association of Australia estimates the current costs of compliance, now between $4 and $9 per megawatt hour, or up to 20 per cent in additional electricity costs, could increase to $25 per megawatt hour under a proposed emissions trading scheme, reported Annabel Hepworth and Duncan Hughes in The Australian Financial Review (8/1/2007, p.5).

EUAA sees blow to industry: Victoria and NSW have said they would not abolish their state renewable energy targets if the emissions trading scheme were introduced. According to a leaked copy of the EUAA’s response, to be submitted later this month, the costs were “likely to lead to fundamental shifts in the structure of Australian industry with consequent structural adjustment plant closures, job losses and loss of new investment opportunities”.

Proposed link to international carbon trade: The companies were responding to a discussion paper about a national and sector-based emissions trading scheme, which could in future link Australia to international carbon markets. Prime Minister John Howard has steadfastly refused to ratify the Kyoto Protocol, which sets targets for cutting emissions, but has softened his line on the greenhouse gas issue recently.

Fed taskforce to report in mid-2007: Last month Howard set up a separate taskforce to the states’ taskforce to examine a global emissions trading system. That taskforce, chaired by Department of Prime Minister and Cabinet head Peter Shergold, is expected to report by midyear, but federal Labor leader Kevin Rudd has said the country needs a scheme immediately.